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Lockdown prompts 31% jump in cloud infrastructure spending

Written by Tue 4 Aug 2020

Microsoft Azure now guards 20 percent of the cloud infrastructure market

Lockdowns implemented due to Covid-19 led to a monumental rise in cloud spending in the second quarter of 2020, according to the latest quarterly figures.

The number crunchers over at technology market watchers Canalys revealed spending on cloud infrastructure services in Q2 surged by 31 percent to $34.6 billion, after companies and citizens across the globe relied on e-commerce, remote learning, content streaming and online collaboration tools to see them through national lockdowns.

“Cloud-based services were pivotal in enabling emergency continuity plans designed to maintain virtual operations during lockdown,” said Canalys Chief Analyst, Matthew Ball.

For context, that’s an $8 billion jump compared to the same quarter last year and $3.5 billion more than was spent in Q1 2020. Canalys said it was the largest quarterly expansion in the cloud infrastructure segment on record.

Some of the larger IT projects planned have been stalled, however, as senior leaders opted to make the most out of existing IT assets than invest in major transformations, which in turn constrained growth rates, Canalys said.

But Ball said fierce demand for cloud-based services should persist throughout Q3 as economies gradually reopen, lockdowns ease, and organisations “capitalise on new emerging opportunities”.

“In addition to supporting continued remote working and distance learning, cloud-based services will underpin the deployment of new digital workflows such as online booking and ordering systems as well as other contactless service engagements,” said Ball.

“It will also be part of solutions to make workplaces Covid-secure by monitoring occupancy levels and footfalls as well as contact-tracing to help reopen large offices and education facilities with confidence.”

Cloud charts

There was no change at the top of the cloud leaderboard, with AWS still leading the pack, followed by Microsoft Azure and Google Cloud Platform.

Microsoft will be pleased, though, that it managed to achieve a 20 percent market share for the first time. This time last year it was guarding an 18 percent share of the pie. Microsoft secured a string of lucrative cloud projects over the last 12 months, wooing large organisations already committed to Microsoft products with cost-effective infrastructure migration.

Canalys said competition from other providers, such as Alibaba Cloud, will intensify as organisations become more adept at leveraging the strengths and weaknesses of available providers when migrating existing workloads to the cloud and developing new cloud-native applications.

“Differentiation among the leading providers will be critical as competition for customer’s spending on digital transformation projects intensifies,” said Canalys Research Analyst, Blake Murray.

“Security, code development and migration tools, support for multi-cloud and hybrid-IT deployments, as well as enabling more predictable costs will be key areas of focus as organizations look to move as quickly as possible, minimize disruption and keep within more constrained budgets.”

Written by Tue 4 Aug 2020


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